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City bond issue may have cost schools, college

By Greg Yee gyee@daily-times.com

Updated:
12/17/2012 09:49:59 PM MST

FARMINGTON — Halliburton Energy Services, Inc. is repaying $22 million in industrial revenue bonds, and its lawyers have acknowledged the company hasn't made required payments in lieu of taxes to area schools.

The City Council will decide how to get the funds back at today's 9 a.m. work session.

The oversight appears to have cost Farmington Municipal Schools and San Juan College, but no one seems to know if - or how much - money was lost.

On March 12, 2008, City Council approved a $22 million bond agreement with Halliburton to encourage construction of a new $24 million facility on Troy King Road.

By passing the bond agreement, the city took over the 40-acre lot until the 30-year bond was repaid. This gave Halliburton an annual $15,000 annual tax break until it completed the project.

The facility was supposed to stimulate economic development in San Juan County and create jobs. It was never built.

Halliburton officials couldn't be reached Monday for comment.

Councilwoman Mary Fischer was a member of council when the bond agreement was passed.

"I was opposed to this project from the very beginning," she said. "The (proposed) site had so many negatives. Halliburton chose to steamroll the process. It only proved that they really shot from the hip. There was nothing about that site that would have worked for them."

If construction of the new facility had gone as planned, the city would have had to build an additional $500,000 to $600,000 in water and sewer infrastructure, according to City Council discussions at the time.

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The city would have also made improvements to Troy King Road, Fischer said.

"We would have had to improve Troy King Road on our nickel," she said. "It would have cost the city a lot of money. Fortunately, we didn't do the improvements prior to (Halliburton) moving in."

Halliburton, in the meantime, has been paying off the $22 million bond.

While reviewing the agreement, company officials found they had not made payments to the school district and the college as required.

"Halliburton has told me that they did not make that payment in lieu of taxes when they should have," said Jay Burnham, city attorney. "They've said they will."

Burnham and other officials said they didn't know how much Halliburton owes the schools.

He will present an amendment today to the 2008 bond agreement that he says allows Halliburton to make those payments after the agreement ends.

The payments might come as a windfall for the school district and the college.

Randall Bondow, Assistant Superintendent of Finance at Farmington Municipal Schools, said he was not aware of any lost property tax revenue and that he would need to investigate the situation before further comment.

A spokeswoman for San Juan College said much the same thing.

"College officials are currently looking into the matter," said Rhonda Schaefer, the college's marketing and public relations director.

Mayor Tommy Roberts said the city is working to get the schools the money they're owed.

"From our perspective, the city's simply facilitating payment of the hold-harmless funds," said Roberts, who was not mayor when the original agreement was made.

Roberts said he is reviewing the original bond agreement and Burnham's proposed amendment.

The blame for the project's failure does not all rest on the company, Fischer said.

"The city didn't do its due diligence either," she said.

Fischer says that the city did not adequately go over the site's disadvantages during discussions with Halliburton.

"Fortunately, the taxpayer didn't pick up much of the tab," she said. "My position is that Halliburton should pay what (they owe). While they have been a very good employer, they need to step up to the plate like everyone else. I don't know that we should give them preferential treatment."

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